# Reading a Malaysian Auditor's Report, Section by Section

> Every section of a Malaysian independent auditors report in order, checked against MIA's illustrative reports in AAPG 1 and AAPG 2, so a lender or buyer can diligence one in five minutes.

- Category: audit
- Language: en
- Status: published
- Updated: 2026-07-20
- Canonical: https://negaraku.md/en/audit/auditors-report-anatomy

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A Malaysian auditor's report is a fixed-format document. MIA publishes the
illustrations — AAPG 1 for the MFRS framework, AAPG 2 for MPERS, both read with
the Companies Act 2016 — and firms follow them closely. That makes diligence fast,
because anything out of place is visible.

Here is every field, in order.

## The report, field by field

### 1. Title and addressee

`INDEPENDENT AUDITORS' REPORT` followed by `TO THE MEMBERS OF [COMPANY] SDN. BHD.`
or `BERHAD`.

The addressee is the members, not the company and not the board. That matters when
the Other Matters paragraph turns up later.

### 2. Report on the Audit of the Financial Statements

A structural heading. It exists so that a second heading, *Report on Other Legal
and Regulatory Requirements*, can appear further down when needed.

### 3. Opinion

Identifies the company, lists the statements audited, gives the period, and
crucially includes a **page reference** — MIA's illustration reads *as set out on
pages XX to XX*. Check that reference against the document in front of you. It is
the auditor telling you exactly which pages the opinion covers.

The opinion sentence names the framework:

> …give a true and fair view of the financial position of the Company as at 31
> December 20XX … in accordance with **Malaysian Private Entities Reporting
> Standard and the requirements of the Companies Act 2016 in Malaysia**.

An MFRS report names the Malaysian Financial Reporting Standards framework
instead. If a company that should be on MFRS shows MPERS, that is a real finding.

Where the opinion is modified the heading itself changes — **Qualified Opinion**,
**Adverse Opinion**, **Disclaimer of Opinion** — and the next section is the
correspondingly named Basis section.

### 4. Basis for Opinion

States that the audit was conducted in accordance with **approved standards on
auditing in Malaysia and International Standards on Auditing**. That dual
assertion is deliberate: MIA approved it in August and September 2016 to make clear
that an audit under the Companies Act 2016 meets globally accepted standards.

### 5. Independence and Other Ethical Responsibilities

Presented as a subheading inside the Basis section. Names both the **By-Laws (on
Professional Ethics, Conduct and Practice) of the Malaysian Institute of
Accountants** and the **IESBA International Code of Ethics**, again dual compliance.

The one exception is a disclaimer of opinion, where ISA 705 (Revised) paragraph
28(c) governs the presentation instead.

### 6. Material Uncertainty Related to Going Concern, if present

A separate headed section, required by ISA 570 (Revised) paragraph 22 where a
material uncertainty exists and disclosure is adequate. It ends with a statement
that the opinion is not modified. **Read it; do not treat it as a qualification.**

### 7. Emphasis of Matter, if present

Draws attention to something already disclosed. Also ends with *our opinion is not
modified in respect of this matter*. It may sit before or after the Key Audit
Matters section.

### 8. Key Audit Matters — listed entities

Present for complete sets of general purpose financial statements of listed
entities, and where the auditor otherwise decides or law requires. Absent from a
normal private company report.

### 9. Information Other than the Financial Statements and Auditors' Report Thereon

For a private company the other information is the **directors' report**. The
section says the opinion does not cover it, and that the auditor read it to
consider whether it is materially inconsistent with the financial statements.

Look for the closing line. *We have nothing to report in this regard* is the clean
version. The alternative describes an identified material misstatement of the
directors' report — an easy thing to skim past and a genuine finding.

### 10. Responsibilities of the Directors for the Financial Statements

Covers preparation to the applicable framework, internal control, and the going
concern assessment.

MIA made a Malaysian-specific decision here: because directors under the Companies
Act 2016 have statutory responsibility for preparing the financial statements
**including oversight of the financial reporting process**, no separate reference
to oversight responsibilities is required. A report that imports a foreign template
with a separate governance body named is not following AAPG 1.

### 11. Auditors' Responsibilities for the Audit of the Financial Statements

The long section: reasonable assurance, professional scepticism, the five bulleted
responsibilities including the going concern conclusion, and communication with
directors on scope, timing and significant deficiencies in internal control.

**A Malaysian check nobody performs.** In August 2016 MIA resolved **not** to allow
the option of placing part of this description in an appendix or on a website.
Auditors are required to include it **within the body of the report**. A Malaysian
report that cross-refers to a website for the auditor's responsibilities is not
following the Institute's decision.

### 12. Report on Other Legal and Regulatory Requirements, if present

Appears only where there is something to report under the Companies Act 2016. Two
common triggers in MIA's illustrations:

- **Unaudited subsidiaries.** Where the reporting firm did not audit all
  subsidiaries, the report identifies them, addressing s.266(2)(c).
- **Records deficiencies.** Where accounting and other records have not been
  properly kept, or where the auditor did not obtain all information and
  explanations required, the report says so. MIA footnotes this to s.266(3), which
  requires the auditor to state the particulars of any deficiency, failure or
  shortcoming.

If you see this heading, read it. It is where a records or governance problem
surfaces even when the numbers pass.

### 13. Other Matters

MIA's standard limitation wording:

> This report is made solely to the members of the Company, as a body, in
> accordance with Section 266 of the Companies Act 2016 in Malaysia and for no
> other purpose. We do not assume responsibility to any other person for the
> content of this report.

If you are a lender or a buyer, this sentence is about you. The report was written
for the members. Anyone else relying on it is doing so outside the stated purpose,
which is why acquirers commission their own work rather than relying on the
statutory report.

### 14. Signature block

MIA's illustrative layout:

```
[Audit Firm]                [Partner]
[AF XXXX]                   [99999/99/9999 (J)]
Chartered Accountants       Chartered Accountant
```

Section 265(5) of the Companies Act 2016 makes this mandatory, not cosmetic: a
report by a firm is **not taken to be duly made or given** unless it is signed in
the name of the firm and in his own name by a partner who is an approved company
auditor, with the **firm number** and the partner's **approval number** legibly
written or printed beside the respective signatures.

The firm number is the AF number allocated by the Registrar under s.265. The
approval number is the number allocated when the Minister of Finance approved that
individual under s.263 — and recall that under s.263(4) every approval is in force
for **two years** and may be revoked at any time.

### 15. Date and location

The date comes last, and under paragraph 48 of ISA 700 (Revised) it must be **no
earlier** than the date the auditor obtained sufficient appropriate evidence,
including evidence that those with recognised authority have asserted responsibility
for the financial statements. In Malaysia that is the directors' approval under
s.251.

Paragraph 47 requires the report to name the location in the jurisdiction where the
auditor practises. Kuala Lumpur, Johor Bahru, Kuching — not the client's address.

## Five-minute diligence checklist

| Check | Where | Red flag |
| --- | --- | --- |
| Opinion heading | Section 3 | Anything other than plain `Opinion` |
| Framework named | Opinion sentence | MPERS on a company that should be on MFRS |
| Page reference | Opinion sentence | Does not match the statements supplied |
| Extra sections | Between Basis and Other Information | Going concern or emphasis section skimmed past |
| Other information conclusion | Section 9 | A described material misstatement of the directors' report |
| Auditors responsibilities | Section 11 | Cross-referred to a website instead of set out in full |
| Other legal and regulatory | Section 12 | Present at all — read why |
| AF number | Signature block | Missing |
| Partner approval number | Signature block | Missing, which makes the report not duly made under s.265(5) |
| Report date | Foot | Earlier than the directors approval date |
| Location | Foot | Absent |

## Common mistakes

- **Reading only the first paragraph.** The going concern and other information
  sections carry the most commercially useful content.
- **Assuming the report was written for you.** The Other Matters paragraph says
  otherwise.
- **Treating the absence of key audit matters as a weakness.** ISA 701 is a listed
  entity requirement.
- **Ignoring the signature block.** It is the only field with a statutory validity
  rule attached, in s.265(5).
- **Accepting a report dated before the directors approved the accounts.**
- **Missing the Report on Other Legal and Regulatory Requirements heading**, which
  is where records deficiencies and unaudited subsidiaries are disclosed.

## What's next

If the report carries a modification, the useful next step is understanding which
of the four opinions it is and why that particular one was chosen.

## Sources

- AAPG 1 — Auditors report on financial statements prepared in accordance with the MFRS framework and Companies Act 2016 — https://mia.org.my/wp-content/uploads/2022/06/MIA_Audit_and_Assurance_Practice_Guide_AAPG_1-1.pdf (MIA)
- AAPG 2 — Auditors report on financial statements prepared in accordance with MPERS and Companies Act 2016 — https://mia.org.my/wp-content/uploads/2022/06/MIA_Audit_and_Assurance_Practice_Guide_AAPG_2.pdf (MIA)
- ISA 700 (Revised), Forming an Opinion and Reporting on Financial Statements — https://mia.org.my/wp-content/uploads/2022/04/MIA_ISA_700_Revised-2.pdf (MIA)
- Companies Act 2016 (Act 777), reprint as at 1 August 2022 — https://www.ssm.com.my/Pages/Legal_Framework/Document/Companies%20Act%202016_Akta%20777_BI%20(1.8.2022).pdf (SSM)

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